Bob Schneider is a Partner in 
Wilson So is the Director of Hitachi America, Ltd. XBRL, Compliance, and SOA
Written by Bob Schneider Posted May 11, 2007
Last week I wrote a post about the exquisite use of analogy in Eric Cohen’s presentation What Is the Global Ledger Good For? Uses of XBRL GL, available at GaLaPoGoS (click XBRL GL Webcasts on the home page). This happy find motivated me to listen to other past sessions of the XBRL GL Working Group in the hope of discovering similar gems.
I was not disappointed. Walter Hamscher’s session on XBRL and SOA reminded me of what a music critic once said about Bob Dylan’s Like a Rolling Stone after you hear it once you have to listen it to again, if only because the first time you won’t believe anything could be so good.
That may seem like hyperbolic praise for a 50-minute talk on a couple of esoteric technology acronyms. But that’s just it most of the discussion isn’t about XBRL and SOA per se. In fact, Walter barely mentions either for the first 35 or 40 minutes of the presentation. Rather, he focuses on:
(1) The broad, complex, and, indeed, overwhelming compliance requirements organizations face.
(2) The impossibility of meeting those requirements at reasonable cost without built-in controls, which require fundamental change in the way companies organize their data and the way staff uses it. These changes mean a lot less hard coding and a lot more “indirection,” a key element of which is referring to things by name and combination of names. They also mean a lot more access to and use of live data.
(3) The recent history of IT, which includes giant strides in relational databases over the past 15 years and the advance of Web Services.
(4) The alternatives organizations face, and the political problems they encounter, in designing information systems that meet both user needs and compliance requirements.
In drawing this wide-scale but detailed landscape, Walter can be credited with two accomplishments, one intended and one likely serendipitous.
The intended achievement is a compelling argument of why “XBRL taxonomies embedded within a Service-Oriented Architecture (SOA) are effective across a wide range of compliance processes both within the enterprise and within the related supply chain.” In discussing those processes, Walter’s emphasis is their impact on applications (ie, everything from spreadsheets to ERP), which vitally affect the vast majority of employees, rather than the rules themselves, which concern a relatively small proportion of staff.
Walter’s (likely unintended) achievement is a superb overview of how large enterprises organize data, which should be mandatory listening for every first-year business school student indeed, for anybody who works with big companies.
Rather than do further injustice to a thoughtful and nuanced argument that demands to be listened to in its entirety, let me point out some ancillary rewards that may encourage you to listen to it:
(1) A simple, clear explanation of SOA that I haven’t found elsewhere. Walter draws upon the example of the average user navigating the Internet and visiting various websites, whose URLs are contained within a global registry and a central naming scheme. SOA recognizes how great this architecture is and extends it so that applications can communicate using the same basic ideas.
(2) An outstanding chart of over 35 compliance requirements faced by large US companies — everything from anti-trust and credit reporting to drug life cycle process and medical conferences. The chart powerfully demonstrates that there is “..no way one single compliance application can possibly enforce all these regulations.”
(3) The handy acronym PAAAIN for explaining what people really mean when they use the far too general term “security,” which Walter hates. PAAAIN is privacy, authentication, access control, availability, integrity, and nonrepudiation (ie, an audit trail).
(4) An explanation of why successful software companies (like Microsoft) keep putting more and more functionality in their applications (like Word) namely, because users really, really hate switching between programs.
The XBRL-GL Working Group presentations are a terrific resource. I encourage you to visit the GaLaPaGoS website to check them out. If you want more information about participating in these outreach calls in real time, contact xbrlgl@xbrl.org.